Russian Crackdown Leads To Closure Of Putin-Linked Bank
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Russia’s central bank has revoked the license of Master Bank, a mid-sized Moscow-based lender, after an investigation uncovered “large-scale dubious operations” related to money laundering and false accounting, reported Reuters on Wednesday.
The news was significant given that a member of Master Bank’s board was the cousin of President Vladimir Putin, while the bank also holds around $1 billion in individual deposits.
Russia’s central bank has revoked the license of Master Bank, a mid-sized Moscow-based lender, after an investigation uncovered “large-scale dubious operations” related to money laundering and false accounting, reported Reuters on Wednesday.
The news was significant given that a member of Master Bank’s board was the cousin of President Vladimir Putin, while the bank also holds around $1 billion in individual deposits.
Although Master Bank is only the 68th largest bank in Russia by assets, it was a top-5 ATM operator and plastic card issuer. Central bank Chairman Elvira Nabiullina declared on Wednesday that Master Bank had negative capital of about $61 million and was involved in a wave of activities involved with the shadow economy.
“The bank concealed its real condition, submitting substantially false reports,” said Nabiullina, as cited by the Wall Street Journal.
[quote]”The bank was involved in servicing the shadow sector of the economy, illegal transactions and repeated violations of money-laundering laws.[/quote]“We were forced to take this (revoking the license) as a last-resort measure,” she added.
Over recent years, the central bank has regularly closed down small institutions on such grounds, but Master Bank is the largest to have had its license revoked since the financial crisis of 2008-2009.
According to Bloomberg, the investigation into Master Bank’s operations had gone on for over a year, even though many Russians had already suspected the bank of illicit activities for more than a decade.
A Livejournal blogger, calling himself dr_crisis, wrote earlier this year: “Hundreds of Master Bank’s armoured trucks full of black market cash drive around Moscow . . . Every morning there is a line of people at the bank’s office on Pyatnitskaya with sacks for cash, and all this is happening in Moscow’s plain sight.”
Sergei Aleksashenko, a former central bank deputy governor, posted on Twitter that Master Bank was “the result of (former) Central Bank head Sergei Ignatiev’s 11 years of inaction in the field of bank supervision.”
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Nabiullina on the other hand have used her first months on the job to try to emphasise the central bank’s independence from the government, said the New York Times. She has so far resisted pressure to lower interest rates, while pursuing tougher regulation on the banking sector.
Vladimir Putin’s cousin, Igor Putin, is still a member of Master Bank’s board, having previously served as a vice president for a brief period. A Kremlin spokesman said that he is a “distant relative” of the president but “they have nothing in common other than their name” and no business ties.
